Moody’s has downgraded Children’s Hospital Los Angeles’ rating to “Baa3” from “Baa2.”
The hospital has recorded three consecutive years of weak financial performance and has been challenged to rebuild liquidity, Moody’s said in a May 15 report. A contributing factor to the hospital’s weak performance is its high dependence on state funding due to its significant Medicaid exposure, “which reflects high exposure to social risk.”
Moody’s said the hospital’s leadership has engaged a consultant to attain at least $100 million in operational improvements over the next two fiscal years. Changes to California’s provider fee and directed payment programs are also expected to substantially increase funding, which will aid efforts to stabilize financial performance.
Children’s Hospital Los Angeles has a negative outlook at its new rating, which Moody’s said reflects the hospital’s weak liquidity position, which could further deteriorate if improvements in core operations can’t be achieved in a timely manner.
